You are here

Uber’s Drive Into India Relies on Raw Recruits

NEW DELHI—How do you train a million new Uber drivers in a country where most people have never driven a car, tapped on a smartphone or even used an online map?

Uber Technologies Inc. faces that daunting task as it tries to avoid its fate in China, where it decided this year to sell its business to homegrown champion Didi Chuxing Technology Co.

The $68 billion San Francisco startup has plenty of cash and cutting-edge technology to bring to its battle in India. Also, the country hasn’t thrown up the kind of regulatory hurdles that have hindered Uber’s growth in other regions. So the company’s ability to find and teach new drivers could decide whether Uber can dominate this fast-growing market.

Along with other U.S. tech firms like Amazon.com Inc., Apple Inc., Facebook Inc. and Netflix Inc., Uber is betting big on the South Asian nation while dealing with the unique challenges of reaching its more than 1.2 billion people.

Uber is intent on outdoing its Indian rival, ANI Technologies Pvt.’s Ola, in recruiting and retaining competent drivers. Ola, which was valued at $5 billion as of last year, has more than 550,000 drivers and aims to have 5 million within the next five years.

Traditional motorized rickshaws sit idle in New Delhi during a July protest by taxi unions against Uber and local ride-share rival Ola. PHOTO: SUSHIL KUMAR/HINDUSTAN TIMES/GETTY IMAGES

Uber has about 400,000 drivers on its platform in India, and wants to add one million in the next two years. While mobilizing an army of drivers is crucial, it is particularly tough in a country where less than 5% of households own cars and few potential drivers understand English or how to use an app.

To win in India, the world’s most valuable startup has to recruit more people like Sikandar Mandal, a 39-year-old former rice farmer with an 8th-grade education. Thanks to Uber he got his first smartphone and discovered YouTube, WhatsApp and Google Maps.

“Uber taught us to speak politely, dress well and follow the traffic rules,” said Mr. Mandal, who lives in New Delhi.

Prospective drivers arrive by the hundreds at an Uber office in a strip mall in a New Delhi suburb. Many of the men, wearing T-shirts, baggy pants and sandals, look bewildered as Uber employees check their licenses and other documents and quickly sit them down in classrooms.

There they are told they must wear clean clothes—preferably long-sleeved shirts and matching pants—and switch from sandals to shoes, which must be kept on at all times.

They learn how to use the Uber app—tap to accept a fare, touch a button to switch to Google maps navigation, click to get someone on the phone if they get confused. Most of the drivers have dealt only in cash, so they have to learn about online banking in order to quickly check if their pay has arrived. And since credit cards aren’t widespread, Uber last year began letting riders pay in cash, a global first.

Uber’s lending arm, Xchange Leasing, has a desk set up to offer drivers leases on vehicles for a few hundred dollars per month. India’s leading auto makers also have salespeople on hand to offer deals on new cars, which in In India can be had for under $5,000. Some drivers have built up small fleets of vehicles, sharing them with other Uber drivers for a cut of their proceeds. A Vodafone booth in the Uber office can provide new recruits with an affordable data plan.

“We were spending over $1 billion a year in China, so it helps us to divert some of that investment and money to India,” Uber India President Amit Jain said.

Most of the drivers have never even sent an email, but those who can absorb Uber’s crash course often earn 50% more than in their previous jobs. Recruits are warned that if they can’t master the system, they will be weeded out by the company’s five-star rating system.

At first Uber tapped the obvious pool of Indians driving taxis, buses and auto-rickshaws. It then started enlisting private drivers working for companies and families. Now, Uber is having to recruit among folks who have never driven professionally.


 

We are not profitable in India....We will continue to invest to grow the market.

—Uber India President Amit Jain


India is second only to the U.S. in the number of trips Uber completes, and makes up about 12% of its rides globally. Its India staff has grown from just a handful a few years ago to some 600 employees, again second only to the U.S.

Uber’s main competition, Ola, launched in 2011, two years before the U.S. firm’s arrival, and has raised about $900 million from the likes of Japan’s SoftBank Corp. and others—including Didi. Uber may have deeper pockets but the Indian leader has more drivers and regular customers, said Ola’s chief operating officer, Pranay Jivrajka. "It’s not about the money you can burn,” he said.

Ola, which operates in 102 cities compared to Uber’s 29, has a better sense of what local consumers and potential drivers want, said Mr. Jivrajka. The Indian company says it is a more effective recruiter because it draws on referrals from its larger pool of drivers. In addition to classroom training, Ola gives fresh recruits new smartphones.

Uber needs to survive and thrive in India to show investors that it can succeed not only in developed countries but also big emerging markets.

“We are not profitable in India,” Mr. Jain said. “We will continue to invest to grow the market.”